Building India’s Hydrogen Economy: Infrastructure, Policy, and Investment

Title - Building India’s Hydrogen Economy: Infrastructure, Policy, and Investment

India is rapidly forging a new identity on the world stage as a formidable leader in green hydrogen, backed by ambitious policies, unprecedented investments, and forward-thinking infrastructure planning. The government’s explicit target—to reach 5 million metric tonnes (MMT) of green hydrogen production per year by 2030 with nearly ₹19,744 crore in support—signals not only a national turning point in energy and industry but also an influential role in the global climate transition. To truly understand India’s green hydrogen transformation, it is vital to analyze the underlying vision, growth drivers, infrastructure rollouts, regional adaptation, policy landscape, investment opportunities, sectoral focus, and the challenges on the horizon.

Vision and Growth Drivers

At the core of India’s hydrogen push lies the National Green Hydrogen Mission (NGHM), launched in 2023. The mission positions India as a global hub for the entire green hydrogen value chain: production, use, and export. This fits within the country’s broader aim of achieving Net Zero emissions by 2070 and catalyzing sustainable economic growth. The NGHM’s targets are bold and clearly defined:

●       Achieve 5 MMT of green hydrogen production capacity by 2030.

●       Drive nearly ₹20,000 crore in annual investments.

●       Support 125 GW of new renewable energy capacity exclusively dedicated to green hydrogen.

●       Enable CO₂ abatement of approximately 50 MMT by 2070.

These objectives reflect the integration of climate action with industry strategy, aiming to capture segments such as steel, refining, fertilizer, and transport—where green hydrogen can substantially reduce fossil fuel dependence.

Infrastructure Build-Out: Electrolysers to Hydrogen Valleys

Developing robust infrastructure has emerged as the backbone of India’s green hydrogen ambitions. Electrolyser manufacturing, critical for splitting water into hydrogen and oxygen using renewable electricity, stands as a flagship initiative. India aims to boost annual electrolyser capacity to 10 GW by 2030, a significant leap from the current 1 GW, powered by subsidies and Production-Linked Incentives (PLIs).

Renewable energy integration provides the necessary cheap and clean electricity. India’s plans for 300 GW of dedicated solar and 100 GW of wind assets—linked directly to green hydrogen—will help guarantee affordable supply for electrolysis.

Pilot and early commercial projects are beginning to shape market maturity. More than 862,000 tonnes per annum (TPA) of green hydrogen have already been allocated to major industrial trials (such as IOCL Panipat and projects by JSW and Tata Steel), which serve as proof points for technical viability and cost competitiveness.

A unique innovation is the concept of Hydrogen Valleys and regional clusters. The government has designated ₹50 crore for Hydrogen Valley Innovation Clusters (HVICs) in cities like Pune, Jodhpur, Bhubaneswar, and Kerala. Here, end-to-end hydrogen ecosystems—production, storage, industrial use, and mobility applications—are demonstrated, providing scalable models for future hubs.

Regional Adaptation and Localized Planning

India’s geographical size and resource diversity necessitate a region-specific approach. The government’s shift toward localized infrastructure planning results in hydrogen roadmaps aligned with regional strengths—be it abundant sunlight in Rajasthan, wind resources in Gujarat, or water availability in coastal zones. State governments are encouraged to embed hydrogen objectives into their local energy and industrial policies, using the ₹4,440 crore capacity-building fund under the NGHM. This ensures that local needs and strengths are factored into project allocation and development, facilitating MSME and start-up engagement.

Policy Support: Central and State-Level Initiatives

India’s policy ecosystem aims to foster both supply and demand for green hydrogen. The Green Hydrogen Policy extends benefits that make project development more attractive:

●       Exemption from interstate transmission charges for renewable-based hydrogen projects.

●       Grid banking of renewable electricity for up to 30 days.

●       Fast-track clearances and access to central infrastructure schemes.

The NGHM’s central funding is balanced by matching state-level incentives—ranging from preferential land allotment and tax breaks to logistical support. Several states are even rolling out their own hydrogen strategies, prioritizing local manufacturing and sectoral integration. This multi-level coordination is expected to deepen if regulatory fragmentation is addressed.

India is also preparing for the global hydrogen economy by signing export corridor agreements with Japan, South Korea, and the EU. These will open doors for Indian hydrogen to flow across borders, positioning the country as a future exporter.

R&D, pilot projects, and skill-building receive considerable attention and investment. Government and industry collaboration is actively promoting technical innovation—such as indigenous electrolyser design and advanced hydrogen storage—and developing a skilled workforce to support this ecosystem.

Investment Dynamics: A Maturing Marketplace

The Indian green hydrogen market stands on the brink of explosive growth. By 2030, demand for green hydrogen may reach 12–20 MMT per annum, capturing almost half of total national hydrogen consumption. The market’s expected CAGR of 20.76% through the decade is driven by multiple factors:

●       Growing industrial adoption, especially in steel, chemicals, refining, and transportation.

●       Anticipated price reductions to ₹260–₹310 per kilogram by 2030, enabled by domestic electrolyser manufacturing and falling renewable energy costs.

●       Robust funding flows from government and private investors, with global capital looking for entry points through joint ventures and technology partnerships.

●       The emergence of hydrogen-specific financial products and platforms—hedging off-take risk and smoothing project finance.

Sectoral Focus and MSME Participation

Industries leading green hydrogen adoption include steel, ammonia, refineries, and new mobility solutions. MSMEs (micro, small, and medium enterprises) play a critical role: bodies like PHD Chamber of Commerce and Industry (PHDCCI) are working to enable MSMEs through technical training, financial skill development, and advocacy. MSMEs are encouraged to explore opportunities in hydrogen component manufacturing, storage, logistics, and ancillary supply chains—areas that will soon witness high demand and job creation.

Start-ups, too, are an essential part of the equation. With supportive policies, incentives, and incubation centers, the Indian start-up ecosystem is gaining traction in green hydrogen technology innovations—such as compact storage solutions, AI-based grid management, and new business models for decentralized hydrogen production.

Challenges: Infrastructure, Finance, and Regulation

Despite powerful momentum, India’s green hydrogen sector faces structural challenges:

●       Infrastructure gaps in distribution and storage raise commercial risks, especially in port areas crucial for export.

●       Financing uncertainties loom due to the absence of robust large-scale off-take contracts and evolving transmission infrastructure. This can slow investor confidence unless addressed by coordinated procurement and long-term energy contracts.

●       Regulatory fragmentation: Without careful alignment, decentralized state policies can hinder nationwide project execution, cause delays, and reduce efficiency. The government is working to synchronize regulations and streamline approvals, but harmonization remains a work in progress.

Conversely, these hurdles offer opportunities for innovation and global best practice integration. “Test-bed” regions like hydrogen valleys can pilot new models, and successful solutions can then be scaled nationwide. India is also exploring international partnerships for sharing regulatory frameworks, technical standards, and investment mechanisms.

Broad Context: India’s Role in Global Energy Transition

India’s green hydrogen expansion must be seen in the context of both domestic needs and international energy leadership. The country’s surging population, industrial growth, and climate ambitions create unparalleled demand for clean, scalable fuel sources. As a member of the International Solar Alliance and the Hydrogen Council, India is at the crossroads of numerous strategic alliances that could shape global standards, drive manufacturing excellence, and foster innovation spillovers across global markets.

India’s actions influence the world’s energy landscape in profound ways:

●       Enabling low-cost hydrogen for emerging economies facing climate and energy security dilemmas.

●       Setting benchmarks for efficient scaling of infrastructure in resource-constrained regions.

●       Demonstrating models for MSME and start-up engagement in disruptive technologies.

The Road Ahead: Policy, Investment, and Innovation

India’s journey toward a hydrogen-based economy is marked by strong political will, rapidly maturing infrastructure, and a commitment to inclusive, sustainable growth. Continued public investment, deeper regulatory coordination, international partnerships, and expansion of MSME/start-up involvement are all crucial next steps.

Bodies such as PHDCCI are pivotal, escalating industry–government collaboration and facilitating the development of the green hydrogen ecosystem. These efforts include MSME skill-building, support for hydrogen start-ups, and advocacy for harmonized regulatory and investment frameworks.

Conclusion

India’s green hydrogen ambitions reflect not only technological advancement but a vision for transformative economic and environmental change. The progress achieved so far is substantial—anchored in clear national strategy and increasing sectoral engagement. With the infrastructure bottlenecks gradually being addressed and policy incentives strengthening, India has a unique opportunity to lead the global energy transition, drive industrial decarbonization, and foster sustainable economic growth for decades ahead.

The country’s march toward a hydrogen future underscores both global competitiveness and local inclusiveness, creating an environment where investment, innovation, and skill-building power a robust hydrogen economy. As India charts its course, the world is watching—and learning—from its success.

https://www.phdcci.in/centre-of-excellence-in-green-hydrogen/